Chinese government punishes theater owners for box office fraud

A woman stands in front of the advertisements of Chinese and foreign films on showing at a movie theater in China, where theater owners are being prosecuted for underreporting box office revenues.

A woman stands in front of the advertisements of Chinese and foreign films on showing at a movie theater in China, where theater owners are being prosecuted for underreporting box office revenues. (Eugene Hoshiko / AP)

BEIJING -- Fifteen Chinese movie theaters that underreported box office receipts are being punished, the China Film Producers Assn. and China Film Distributors and Exhibitors Assn. said Thursday.

Box office fraud is believed to be a significant problem in China. The state-run China Daily last month cited experts as saying last year’s box office receipts may have been underreported by at least 10%, or some $360 million.

China’s movie watchdog -- the State Administration of Press, Publication, Radio, Film and Television -- said last month it has issued new rules to curb fraud, including requiring theaters to upgrade ticketing software by May 1. It also said distributors ought to inspect theaters routinely and report rule-breakers.

China is the world’s second-largest theatrical movie market behind the United States and has been adding screens at lightning pace. But a number of cinemas, particularly in smaller cities, have been accused of using various tactics to misreport box office and avoid taxes.

Among the techniques reportedly employed to underreport sales are handwriting tickets or not issuing tickets at all. In other cases, moviegoers buying a ticket for a pricey film may be issued a ticket for a less expensive screening.

In the 15 cases of violations aired publicly on Thursday, a theater in Shandong province reported revenues of $321 on Jan. 17 when, in fact, it had sold $8,332 worth of tickets. The next day, it sold $2,937 worth of tickets by 1 p.m. but reported receipts of only $677.

The 15 cinemas faced five different tiers of penalties, including being barred from showing films for an undefined period and being ineligible for certain subsidies. Other theaters were simply “criticized.”

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